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Deals damage. The target's Attack stat and the target's stat boosts, not the user's, are used in damage calculation. The target's ability and item, if they boost the Attack stat, are not incorporated into the calculation. The user's item, ability, and status affect the damage calculation.
This move is quite useful for weaker defensive Pokemon, as it will hit much harder than their other moves if used on a target with a high Attack stat. The main example of this is Sableye, who needs to focus on its defenses and can't spare any EVs into Attack. In order to then deal damage, Sableye will use the base Attack stat of its opponents against them with Foul Play, effectively giving Sableye a powerful attack without having to invest any EVs into Attack.
Crunch is a more reliable alternative that is based on the user's Attack stat and has a chance to lower the opponent's Defense.
Night Slash is a more reliable alternative that is based on the user's Attack stat and has an increased chance to land a critical hit.